Canadian stocks: Saputo has risen sharply—and it could go even higher

If you’ve been following our TSI Network Daily Updates, or subscribe to one of our paid newsletters or investment services, you’re likely familiar with our three-part TSI Network investing program.

3 easy steps to lower-risk profits in Canadian stocks

One key part of our program is to spread your money out across the five main sectors of the economy: Manufacturing & Industry; Resources; Consumer; Finance; and Utilities. (The other two parts are to invest mainly in well-established, dividend paying companies and avoid stocks in the broker/media limelight.) In general, stocks in the Resources and Manufacturing & Industry sectors expose you to above-average volatility, and stocks in the Utilities and Canadian Finance sectors entail below-average volatility. Consumer stocks usually fall in the middle. [ofie_ad] That’s because Canadian stocks in the consumer sector benefit from continuous and often habitual use of their products and services, so they have much more stability in their sales and earnings, no matter what the economy is doing. In the June 10, 2011 Successful Investor Email/Telephone Hotline (which you can immediately view when you take a 1-month FREE trial to The Successful Investor—more on that below), we’ve updated our buy/sell advice on dairy product maker Saputo Inc. (symbol SAP on Toronto). The Canadian stock’s share price has risen 50.8% for us in the past year.

Canadian stocks: Saputo is responding to rising ingredient prices

Saputo is Canada’s largest producer of dairy products, including milk, butter and cheese. It also makes snack cakes and tarts. In addition to Saputo, the Canadian stock’s main brands are Neilson, Stella and Dairyland. The company also has operations in the U.S., Argentina and Europe. In its 2011 fiscal year, which ended March 31, 2011, Saputo’s sales rose 3.7%, to $6.0 billion from $5.8 billion in 2010. Earnings rose 17.9%, to $451.1 million, or $2.16 a share, from $382.7 million, or $1.83 a share. Earnings at Saputo’s U.S. dairy operations rose 31.6%, thanks to higher selling prices for cheese. Earnings at its Canadian, European and Argentinean dairy division rose 7.0%. The company is improving its efficiency in response to rising ingredient costs. As part of this plan, it has now closed its dairy plant in Brampton, Ontario, and merged this plant’s operations with other nearby facilities.

Now you can get our updated analysis and clear buy/sell/hold advice on Saputo and dozens of other Canadian stocks FREE

As I mentioned, Saputo has gained 50.8% for us in the past year. In our June 10, 2011 Successful Investor Email Hotline, we take a fresh look at the company to see if its recent moves are enough to help it continue its gains in light of its rising costs. Best of all, you can get our analysis, which concludes with our clear advice on whether you should buy, hold—or sell—this Canadian stock, absolutely FREE when you take a 1-month FREE trial to The Successful Investor today. You have no risk and no obligation. Click here to get started right away. (Note: If you are a current Successful Investor subscriber, please click here to view Pat’s recommendation. Be sure to log in first.)

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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